roadshow presentation schickler july 2015

Dubai, July 2015

A Strategic Framework for Publishers and Case Studies

from Leading Publishers in the World

SCHICKLER Media Consultants

July 2015 Page 1

All over the world publishers experience the shift in media industry and face similar

challenges.

Trend Summary

The global media industry faces big changes

and needs radical transformation

July 2015 Page 2

Publishers react to these challenges in different ways. With our long experience of over

30 years we have found and analyzed best practices worldwide.

Best Practices from all over the World

July 2015 Page 3

Developing

new

businesses

Optimizing

the core

business

7

6

5

4

3

2

The SCHICKLER Strategic Layer Model was developed from those international best

practices. It contains 7 different layers.

1

Operational Excellence Core-Business 1

Digitalization Core-Business 2

3 Consolidation Core-Business

Thematic Verticals / Marketplaces 4

Transaction based business models 5

Infrastructure-Services 6

Diversification 7

SCHICKLER Strategic Layer Model

cut it into halves the „Onion Layer Model“ Take an Onion

July 2015 Page 4

Layer 1: Operational Excellence

Core Business traditional revenue

Diversification new revenue

1

July 2015 Page 5

Operational Excellence means focusing on the performance and long term profitability

of the core activities through optimization and modernization.

Layer 1 – Operational Excellence

A SCHICKLER Benchmarking analysis has shown that operational

excellence programs can improve EBITDA by up to 10% points

Cost Base Restructuring Revenue Improvement

Operational

Excellence

Lean Processes

& Structures

Outsourcing

Centralization

Structures

& Skills

Systems &

Sales Tools

Product Portfolio

Optimization

and Rationaliza-

tion through…

+

Modernization

and Professio-

nalization of…

July 2015 Page 6

Brief description

Type of Publisher: national

Number of Titles: ca. 30

Revenue 2013: 428m SFR

# Employees: ca. 1.500

Regional Focus: CH, AT, DE

The Neue Züricher Zeitung is top-notch at operational excellence. They constantly focus

on their core business and outsource all non-core-functions.

Cost Base Restructuring

Centralization Outsourcing Processes &

Structures

All back office

services (Finance,

IT, HR)

One news desk for

all regional titles

central reader

marketing

Delivery outsourced

to post office

Printing outsourcing

in progress

Constant focus on

Benchmarks and

Best Practices

By outsourcing their logistics and print functions NZZ is one of the

most consequent publishers in focusing on core business.

Best Practice Layer 1: NZZ for Operational Excellence on Costs

July 2015 Page 7

SCHICKLER BENCHMARKING PROCESS

Benchmarking the performance with best in class practices is a key to find operational

excellence.

Approach to Operational Excellence: Benchmarking

Gap: -25%

Deciding project

scope and collecting data

Gather KPIs for

Benchmarking

Localize results

and align with management

Prioritize efficiency

drivers & detail actions

1 2 3 4

Best in class

Your company

We recommend a low-key approach to start with

It will give you a feeling of where to dig deeper but not influence your daily work

July 2015 Page 8



2

Layer 2: Digitalization of Core Business

July 2015 Page 9

Print

Layer 2 deals with the radical transformation towards a full digital publishing model.

Focus lies on managing and monetizing the structural shift.

Layer 2 – Digitalization of Core-Business

Adver-

tising

Copy

Sales

Reader

Offers

International Best Practices show that even traditional regional newspapers

can achieve a Digital revenue share of > 10% within 3 years

Today‘s Business

More and

new Content

Seamless

Workflows

Integrated

Structures

Modern

Skills

1 2

3 4

Tomorrow‘s Business Transformation

Cross media

Marketing Services

Print Ads

Online Ads

Mobile Marketing

Paid-for Content

Print Content

Digital Content

Data Access

Transaction Business

E-Commerce

E-Business

Reader Shops

July 2015 Page 10

Schibsted has managed to create digital dominance. Their increasing digital revenues

make up for the decreasing offline businesses.

Best Practice Layer 2: Schibsted for Digitalization of Core Business

“The print advertising market continues to decline rapidly. Our job is

to adapt the cost base to the market development, and at the same

time make sure we are at the forefront when it comes to online

product offerings.“

Schibsted Norge Mediahouse Revenues 2011 – 2013* in MSEK

4.990 4.754 4.384

589 732 943

2011 2012 2013

Revenuesonline (core)

Revenuesoffline (core)

- Rolv Erik Ryssdal, CEO

Brief description

Type of Publisher: regional /

national


Revenue 2013: 15bn NOK


Regional Focus: Internat.

Contains only Schibsted’s subscription titles and VG; numbers represent combined revenue from advertising and circulation sales; Source: Schibsted Website

Stabilizing the shrinking core business through digital revenue growth

Schibsted

Publishing

Business

Revenues*

July 2015 Page 11

SCHICKLER DIGITAL FITNESS PROGRAMM®

The Digital Fitness Program enables publishers to start or improve their digitalization

process based on a proven and “hands-on” three steps approach.

Approach to Digitalization: Digital Fitness Program

Increase daily reach

of website

Modernize Ad

Products

Optimize Sales

Structures

Implement

Steering Systems

A B C D

Involvement of all major departments in the whole organization

Increase revenues from

Digital Advertising

Generate revenues with

E-Commerce offers

Establish Paid-for

Content

Modul 1 Modul 2 Modul 3

July 2015 Page 12



3

Introducing Layer 3: Consolidation of Core Business

July 2015 Page 13

Horizontal and vertical integration is a key driver for strengthening the market position

or improving the performance.

Various international best practices have demonstrated that an aggressive

acquisition approach paths the way regional market dominance

Packaging/

Production Site

Distributor

Ad Agency

Layer 3 – Consolidation of Core-Business

Corridor for vertical acquisitions

Corridor for horizontal acquisitions

Different

region

Different

language Competitor A Competitor B Core Product

July 2015 Page 14

Madsack went from publishing one title in central Germany to being the dominant

publisher in northern Germany. They created significant size through acquisitions.

150% Revenue growth form 2006 to 2012.

3rd largest share of daily newspaper subscribers in Germany.

5th largest circulation volume in Germany.

Best Practice Layer 3: Madsack for Consolidation Strategy

Before Consolidation After Consolidation

Centralization of…

Editorial desk

Sales Support

Administration

Hannover

Brief description

Type of Publisher: regional

Number of Titles: 47

Revenue 2013: not public


Regional Focus: DE

July 2015 Page 15

SCHICKLER CONSOLIDATION MECHANISM®

Approach to Consolidation: Preparing with three steps

With a simple three step model, publishers can find their tailor made consolidation

strategy.

Top

Performer

Glass

Bead

Cinderella

Poor

Dog

Att

rac

tive

ne

ss

of

Ma

rke

t &

Cu

sto

me

rs

Productive efficiency

of target

Innovation

Efficiency Market

orientation

Processes

Structure

Sales Force

…

…

…

…

…

…

1 2 3 4

Innovation

Market

Orientation

Efficiency

„Who are we?“ „Who‘s available and has portfolio fit?“ „Is organization fit given as well?“

…if multiple targets are available

…if no or only some targets are available

Akquisition

Strategy

Scanning

Routine Relation-

ships

Target

Register

Annual process

Self Assessment Identification and/or

Classification of Targets Feasibility Check

1 2 1

Functional Target Rating

Weighted Target Score

Opportunity approach…

Valuation approach…

July 2015 Page 16

4



Layer 4: Thematic Verticals and Market Places

July 2015 Page 17

Owning market places and thematic dominance is a necessity to stay competitive

within fast changing consumer behavior

Layer 4 – Thematic Verticals / Market Places

Typical Thematic Verticals

for Publishers

Best practice publishers manage to significantly increase their average reader

monetization – and at the same exploit new customer segments

Cars

Health & Fitness

Beauty

Real Estate

Hospitality & Travel

Food

Financial Services

Thematic

Dominance UGC

Communities Marketing

Content

Professional

Content

Services

Classifieds

Advertising Events

E-Commerce

Thematic

Dominance

July 2015 Page 18

The BBC has built the strongest Food content proposition across the UK by

establishing their brand on various online and offline channels.

Best Practice Layer 4: BBC for Thematic Dominance

1.6m weekly readers and +18m Unique Users per month

Strong monetization-approach trough various paid-for products

Strong cross-referencing through all products and channels

Dominant „Food“ content supplier in UK

Brief description

Type of Publisher: national

Number of Titles: 20 (magazines)

Revenue 2014: 3.7bn GBP


Regional Focus: UK

ø£50

£4.25

ø£20

£5-£500 £2.15

PayTV

ø£2

free

Print Mag

Recipe

Books Events Special Offers

iPad Mag

TV Shows

Recipe App

Facebook

July 2015 Page 19

SCHICKLER PRIORITISATION APPROACH

To find the perfect spot for launching a thematic vertical you need to analyze it from

three different angles.

Approach to Thematic Dominance

Readers‘

Interests

Market

Potential

Content

& Sales

Strengths

Readers Research

Market Assessment Capability Assessment

Contains the most likely promising

topics to reach a dominant

market position.

Field

of best

Chances

Priority Theme List

1. Real Estate

2. Automotive

3. Food

4. Financial Services

5. Beauty

…

86%

82%

75%

58%

Score

…

July 2015 Page 20

5



Layer 5: Transaction based Business Models

July 2015 Page 21

Owning platforms where consumers and businesses search and buy goods and services grants further revenue potential.

With double digit growth rates transaction based business models are not only a

viable revenue source – the also help to diversify away from core business

B2C

C2C

B2B

G2C

G2B

Layer 5 – Transaction Based Business Models (Examples)

July 2015 Page 22

Axel Springer SE has managed to create strong revenue opportunities through trans-

action based business models. 70% of Springer’s profit results from digital activities.

Best Practice Layer 5: Springer SE for Transaction Based Business Models

One of the leading providers for

price and product comparison

Zanox is the leading performance

advertising network in Europe

Rev: 479 Mio. Euro (2013) Rev: 53 Mio. Euro (2012)

Idealo Zanox

52% of overall revenues and 70% of total profit result from digital

activities.

Advertising revenues result by 3/4 out of digital

Brief description

Type of Publisher: international


Revenue 2013: 2.8bn EUR


Regional Focus: International

July 2015 Page 23

“JUST START” APPROACH for E-Commerce Models

Pick an internationally proven business model that does not yet exist in your market.

Pick an internationally

proven business model “Just start”

Starting early gives you the chance to build a strong market position.

Internationally successful transaction based business models can be taken as blue print.

It will help you build a dominant market position.

Minimum Viable Product

Approach to Transaction Based Business Models: “Just Start”

Improve

July 2015 Page 24

6



Layer 6: Infrastructure Services

July 2015 Page 25

Providing online and offline infrastructure services means utilizing a company’s assets

and exploiting market trends to serve B2B customers

Layer 6 – Infrastructure Services

International Best Practice Publishers realize already >20% of

their revenue offering services to third parties

Printing/

Production HR Marketing IT … … Function

Potential

Infrastructure

Offering

Third Party

Printing

Payroll

Services Ad Sales

IT

Hosting

… … …

July 2015 Page 26

Bertelsmann, one of the largest media houses worldwide, has built Arvato. A company

that bundles all shared services and offers them very successfully to third parties.

Arvato started as subsidiary of Bertelsmann to centralize services.

They used their free capacities to offer their services to others.

Arvato now serves 12 industries, publishing being just one of them.

Best Practice Layer 6: Arvato for International Outsourcing Services

Creation CRM Customer

Services E-Commerce

Finance IT Print SCM

Brief description

Type of Publisher: none

Number of Titles: none

Revenue 2013: 4.4bn EUR


Regional Focus: worldwide

July 2015 Page 27

SCHICKLER Capability Assessment®

The market-relevant competences are assessed with regards to their potential of being

offered to third parties.

Approach to Infrastructure Services: Analysis of Strengths and Weaknesses

Criteria Weighted Score Commercial Value

1 2 3 4

Accounting

Call Center

Creative Serivces

Facility Management

…

Assessment Selection Modelling

Assessing internal services regarding their strengths, weaknesses and business potential.

July 2015 Page 28

7



Layer 7: Diversification

July 2015 Page 29

New Businesses grant the widest diversification and aim at occupying attractive

business fields that ensure long term growth and profits beyond the existing portfolio.

Branded

Use of

Branding

Non-

Branded

Digital Non Digital

Basic Business

Model

Examples

Branded / Digital

E-Learning online portal

Online research services

…

Non-Branded Digital

Couponing platform

Shopping Clubs

…

Branded / Non Digital

Insurance Services

Travel fairs

…

Non Branded / Non-Digital

Advertising Agencies

Mobility Solutions (e.g. bike rental)

New Business Investment Matrix

Layer 7 – New Businesses

The Sächsische Zeitung in Germany is already generating >40% of

their revenue from businesses outside the publishing core

July 2015 Page 30

The Sächsische Zeitung is a regional publisher diversifying within non-digital

businesses.

Best Practice Layer 7: Diversification

Main Premise: Strengthening the core brand

Focus on diversification through “non-digital/branded” activities

Already >40% of revenues generated from outside publishing

business

Muss noch

gefüllt

werden

Limousines

Tourism

Ticketing

Fairs

Legal Advice

Key-Finder Service

Rent-a-Bike

Logistics Services

Diversification Activities (selection)

Brief description

Type of Publisher: regional

Number of Titles: 1

Revenue 2013: not public

# Employees: ca. 500

Regional Focus: DE

July 2015 Page 31

SCHICKLER EXPANSION GRID

The “Expansion Grid” identifies those new businesses that are most likely to be

successful within your organization. They will be assessed by five dimensions.

Approach to New Businesses: Expansion Grid

Localization

Organizational

Fit

Trust

Scalability of

Investment

Complexity of

Market

July 2015 Page 32

7

7-Layer Strategy Model

Developing

new

businesses

Optimizing

the core

business

6

5

4

3

2

1

Operational Excellence Core-Business 1

Digitalization Core-Business 2

3 Consolidation Core-Business

Thematic Verticals / Marketplaces 4

Transaction based business models 5

Infrastructure-Services 6

Diversification 7

July 2015 Page 33

3 Years Modernization Plan („Strategy Onion“)

The layers can be applied separately or combined. Depending on individual company

type there can be various strong approaches to modernizing the business.

Typical Ways of Improvement

Maximum

Efficiency

Driving

Innovation

High Quality

Content

Approach Key Goals

Efficient cost structure and processes

Margin improvement through centrali-

zation and Economies of Scale

Outsourcing of non core functions

Layer 1



Layer 3: Consolidation Core Business

Layer 6: infrastructure Services

Market dominance through product

development

Transformation of core business

New revenue streams to diversify risk

Layer 2: Digitalization of core Business

Layer 4: Thematic Verticals

Layer 5: Transaction based BM

Layer 7: Diversification

ILLUSTRATIVE

High quality journalism on all

platforms

Cost efficient organization

Broader voice and reputation


Layer 2: Digitalization of Core Business

Layer 3: Consolidation Core Business

Which layer combination appears most suitable for your organization?

July 2015 Page 34

SCHICKLER Management Consultants is a leading expert for newspaper publishers.

We focus on operational excellence and strategic growth for our clients.

SCHICKLER – Professional Expertise in the Publishing Industry

A worldwide unique

benchmark database

All areas are covered

by a multi-level

benchmark system

Founded by former board member

of Gruner + Jahr (Bertelsmann)

Focus on media industry,

more than 500 projects

in the last 10 years

Consulting team consists of

former Newspaper CEOs and

experienced consultants

Deep knowledge of

core processes

Wide set of best

practice examples

Digital strategies for

Newspaper Publishers

Revenue enhancement

strategies

Operational Excellence in Newspaper Companies Strategic Growth of Newspaper Companies

Digital Fitness Programs

Long experience in

implementing revenue

strategies in Newspaper

Companies

July 2015 Page 35

Schickler has a leading expertise in the media industry in Europe.

We are market leader in the German speaking countries.

References

Rankings are for Germany, Austria and Switzerland

* Source: Horizont Ranking of the 100 largest German media companies (2009), without public corporate media

** Source: Schickler Market Survey „Zeitungsverlage in Deutschland – Newspaper Publishers in Germany“, 2010

*** Source: Horizont Ranking of the 100 largest German media companies (2009), without public corporate media

Top 12

Magazine Publishers***

67%

Schickler Clients

Top 100

Media Companies*

52%

Schickler Clients

Top 100

Newspaper Publishers**

75%

Schickler Clients

We have worked for > 250 media companies and > 150 publishing houses.

Our customer base includes TV and radio stations, online publisher, print publisher and

E-Business companies

Top 12

Electronic Media

70%

Schickler Clients

July 2015 Page 36

Our client portfolio consists of over 200 Media and E-Business companies - here are

some examples.

July 2015 Page 37

Media is in our DNA – all partners at SCHICKLER have longstanding experience in the

media business and lead a team of over 50 SCHICKLER consultants.

SCHICKLER Management

More than 20 years within TIME industry

Has led more than 300 media projects

Elected among the 100 most important media managers in Germany

Consultant to German government in media topics

Has been with SCHICKLER for over 10 years

Broad international experience

Strong focus on structural and strategic topics, as

cooperation, reorganizations, digital strategies

and go-to-market approaches

More than 20 years of management experience

Focus on digital strategies, sales strategy and sales efficiency.

Former head of digital at Mecom Group plc,

(International Media Company, London, UK)

Over 20 years of management experience with

media companies

Expert on go-to-market and growth topics

Former managing director of Handelsblatt

Verlagsgruppe and Tagesspiegel in Berlin.

Professor for Digital Technologies and Business

Models in Berlin

Expert in developing business models in the

areas of online content, B2B and B2C media

European Officer of an internationally known US

venture capital fund

12 years of consulting experience in media

companies

Mentor for operational excellence in the

Pro7Sat1-Accellerator Program (biggest TV

company in Germany)

Lecturer in various media panels

Rolf-Dieter Lafrenz Alexander Kahlmann

Peter Skulimma

Joachim Liebler Prof. Dr. Robert Daubner

Christoph Hüning

roadshow presentation schickler july 2015

Data & Analytics

core activities

best practice layer

international best practices

world publishers

schickler benchmarking

class practices

onion layer modeltake

leading publishers